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Monday, September 5, 2011

MAXVALU THINKING SMALLER

Aeon (Thailand) Co, the operator of the MaxValu supermarket chain, will spend around 300 million baht on outlet expansion next year.

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Because the minimarkets cover as little as 300 square metres, it’s easier for Aeon to find good sites in neighbourhoods all over the city, especially near masstransit lines.

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The company plans to open 20 new MaxValu Tanjai mini-supermarkets next year, bringing its total to 40. Each requires an investment of 8-10 million baht.

At the same time, it will open two or three MaxValu supermarkets in the original format, bringing the total to 15 or 16. A MaxValu of 1,000 to 2,000 square metres costs around 30-40 million baht to develop.

Once five new mini-supermarkets are opened in an area, a larger MaxValu supermarket will be built nearby to provide logistical support to the smaller outlets.

Yohsei Honda, deputy managing director of Aeon (Thailand), said the first MaxValu Tanjai was introduced in Thong Lor at the end of last year. Such stores cover only 300 sq m, so it is easier to find locations in new communities, particularly in downtown areas.

Currently, there are 11 MaxValu Tanjai mini-supermarkets and the number will rise to 20 by year-end.

"The speed of MaxValu Tanjai expansion will not only help us build brand awareness among customers but also generate quick cash flow for us, so we will have more capital to continue our investments," Mr Honda said.

The MaxValu Tanjai stores will be opened mainly in locations accessible to the BTS skytrain or the MRTA subway. The number of mini supermarkets is expected to rise to 100 over the next three years.

Developing more small outlets has been the business strategy of all the giant retail chains over the past two or three years because it is difficult to find large plots in prime locations. Other obstacles for retailers are the stricter city planing and zoning rules.